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Saizen REIT: A retest of resistance at 18c?

Wednesday, October 17, 2012

On two occasions in the past, I did not partially divest my investment in Saizen REIT as its unit price touched a high of 18c. It was due to a belief that it remained undervalued even at that price. Yesterday, Saizen REIT's unit price broke resistance at 16.8c while it touched a high of 17.7c before closing at 17.4c today. Could we see 18c again soon?

The lower highs on the MACD and the declining OBV are rather ominous. Forming negative divergences with the ever rising unit price, any chart watcher would not be wrong to wonder if a correction could take place soon. In such an instance, immediate support is at the former resistance of 16.8c and if that fails to hold, the next support is at 16.4c.

So, would I sell if a retest of 18c should take place? I could do a partial divestment.

Related post:
Saizen REIT: 2H FY2010.


Ah John said...

Hi AK, Saizen NAV is 0.30?

AK71 said...

Hi Ah John,

Yes, thereabouts. :)

Ah John said...

Interesting, is NAV adjusted to market value? If so, why nobody buy out and delist it?

Ah John said...

Hi AK, btw, how come Saizen got so low P/B? Even Japan perspective is not so good, but 40% value cut is impossible in near term.

AK71 said...

Hi Ah John,

Yes, the NAV is based on the latest valuations.

I have said before that Saizen REIT is a bargain. It still is.

Could some deep pocketed investors notice it in future and offer to delist it? Your guess is as good as mine. ;)

AK71 said...

Hi Ah John,

I cannot honestly say I know why Saizen REIT is trading at such a huge discount to NAV although I could make a few guesses. ;)

What matters more to me is to know what to do in such instances. :)

JCK said...

IF NAV is high, and DPU is low....i guess it just mean that the ROI will be low in entry into the REIT.

SO if an investor wants to buyout the company, he certainly will not be investing for the REIT effect but to cannibalise the assets to open up their values for SALE.

Just simple thinking.
Of course he can re manage the DEBT based on the NAV, but NOt on equity.
Any thoughts?

AK71 said...


The REIT was selling some of its buildings when YK Shintoku's CMBS was still unresolved. In those days, it was revealed that the NPI yields of the buildings sold were all in excess of 10%. I remember a case which had a NPI yield of 13%. So, yes, if someone were to take the REIT private, they could make a lot more money with much higher returns.

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